Recently, the Reserve Bank of India (RBI) has implemented revised norms requiring deposit-taking housing finance companies (HFCs) to maintain higher levels of liquid assets against their deposits.
- Effective January 1, 2025, these companies must hold liquid assets equivalent to 14 per cent of their outstanding deposits.
About Housing Finance Companies
- Housing Finance Companies are entities registered under the Companies Act and which primarily engage in the business of providing finance for housing, whether directly or indirectly.
- The Government of India transferred the regulation of HFCs to RBI from August 9, 2019, onwards. Before that, Housing Finance Companies were regulated by the National Housing Bank (NHB).
- To hedge their underlying exposures, the RBI has allowed HFCs to participate in currency futures exchanges.
- HFCs have also been permitted to participate in credit default swaps (CDS) markets as users only.
